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Kelly Industries needs to raise capital for expansion purposes. Management is considering issuing $1,000,000 of...

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Accounting

Kelly Industries needs to raise capital for expansion purposes. Management is considering issuing $1,000,000 of 7.5% 20-year bonds dated June 1, 20X1 with interest payment dates of December 1 and June 1. Kellys year-end is December 31. Assuming the bonds were issued on June 1, 20X1 at 93 5/8 and the company uses the straight-line method of amortization, the semiannual interest payment on December 1, 20X1 would include a

A. debit to interest expense for $39,093.75

B. debit to discount for $3,187.50

C. debit to discount for $1,593.75

D. credit to cash for $75,000.00

E. credit to bonds payable for $936,250.00

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